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GameStop’s craze has caught the eye of a new set of investors: Children

The GameStop stock surge got kids interested in investing for the first time. Now parents are using it as a teaching moment.

(Washington Post illustration; iStock)

SAN FRANCISCO — Ann Siegle’s 10-year-old son came to her this week with an unusual request: “Mom, we should buy GameStop stock.”

Until recently, his interest in finance had been limited to getting enough cash for slushies and Sour Patch Kids at the corner Mobil station. But after hearing about the GameStop rush from friends and on YouTube, he was intrigued by the excitement and tales of instant riches.

Siegle, an East Lansing, Mich.-based business owner who teaches technology to female entrepreneurs, didn’t miss a beat. She asked him when he last went to a GameStop. He couldn’t remember, he said, because he buys most of his games online. Right, she said. His mom used it as an opportunity to teach him about smart investing and recognizing the real value of companies, and she now plans to get him involved with their investment accounts, controlled by her, to learn even more.

She did not, however, buy him shares of GameStop.

Last week, millions of Americans found themselves taking a crash course in the stock market, reading explainers about the GameStop situation and watching TikToks about how shorting stocks works. Many were just curious, some were invested themselves, and a handful were just trying to keep up with their underage children’s new day-trading interests.

EXPLAINER: Why GameStop’s stock surge is shaking Wall Street

The Reddit-fueled rush to buy GameStop and other “meme stocks” has attracted a number of younger-than-usual investors. Some were investing for the first time, and most of those under the age of 18 were doing it with the help and approval of their parents. Ten-year-old Jaydyn Carr watched $60 of GameStop stock he received as a Kwanzaa present turn into $3,200 before he decided to sell. His mother made the transaction.

It was the perfect storm of free time, access to social media and increasingly user-friendly ways of trading stocks, like smartphone apps. Kids who have been learning remotely are spending more time online and even following the news more closely than before. The framing of the surge as little guys taking on hedge funds was especially appealing.

With the stock now worth far less than its peak closing price of $347, it’s become a real-world learning experience for anyone dipping their toes in the sometimes dry world of investment.

“The recent news has sparked a lot of interest. Parents should strike while the iron is hot. Sign them up for a class, get them a book,” said Keallah Smith, who teaches students between the ages of 9 and 19 about financial basics.

She has a class on online education site Outschool called “Financial Literacy for Kids” and said there’s been a surge in interest in the stock market from her students this week. While GameStop didn’t pan out well for many traders, and goes contrary to most beginner investment advice, she said it can be a great jumping-off point.

When it comes to buying and selling stocks, Smith finds kids are starting to become interested and able to grasp the concept around 10 or 11. She encourages them to get started with what’s called a “custodial” account — an investment account opened in a minor’s name by a parent or guardian. The kids can participate in decisions, but the guardian is ultimately responsible for any trades.

“So many adults learn these lessons later in life, usually the hard way,” she said. “I feel like if I can target kids, they can at least be introduced to these concepts earlier in life.”

As GameStop stock crumbles, newbie traders reckon with heavy losses

Minors aren’t allowed to open brokerage accounts for themselves. Legally, they need a parent or guardian to open a custodial account under their name. The accounts are opened using the child’s Social Security number, and any money in the account becomes theirs when they turn 18 or, in some states, 21. Many big financial companies such as Fidelity and TD Ameritrade offer custodial accounts. Some parents let older kids take over use of the services themselves, installing the apps on their personal devices.

Acorns, a savings and investing app, launched a product specifically for parents and guardians earlier this year called Early. While it has some kid-friendly design touches, the account is not meant to be used by children themselves, said Kennedy Reynolds, Acorns’ chief brand officer. The custodial accounts can’t be invested in individual stocks and are UGMA and UTMA accounts, meaning they can be used for expenses like higher education and turned over to the minor when they reach the appropriate age.

“You make anything look like a game, and kids are going to find a way to play,” Reynolds said. “This moment is a really important reminder of our responsibility to provide support responsibly. Give everyone a path, yes, but give guidance on that path.”

For high school students at online high school Sora, it felt more like a moment in history than another game. On Tuesday, the school added an impromptu online class for students interested in the topic, covering hedge fund mechanics and what a short squeeze is. The kids had seen nonstop mentions of it on social media and were buzzing about everything from GameStop to cryptocurrency in their school Discord chat rooms. One 16-year-old student had been involved in the r/WallStreetBets Reddit forum for a while and was financially, and emotionally, invested.

“Understand, it’s almost revolutionary vibes these students felt swept up in,” said Sora co-founder Garrett Smiley. “They just felt they were in the midst of something novel and important.”

The GameStop stock situation isn’t about populism. It’s about whether the market is ‘real.’

The roller-coaster ride of the past two weeks has made short-term trading look high-risk and high-reward, offering gambling-like hits of adrenaline. That’s why experts do not recommend turning over complete control of the apps to children. One alternative is simulated trading, which can be done manually or with a virtual stock market app and eliminates the risk (and reward) of using real money.

“I think teens in particular, they don’t think ahead,” said Siegle, who also has a 13-year-old daughter. “I think it would be dangerous to let them monkey around with their own account.”

Investing is a regular topic of discussion in Julia Grinberg’s home. The mom of two has an MBA in finance and previously worked in Wall Street institutions for 20 years. Her 13-year-old son is active on Reddit, and while he wasn’t in the r/WallStreetBets forum, he followed the news about the rush closely.

“We did talk about what was happening,” said Grinberg, who lives in Glen Rock, N.J. “I obviously have my own views on it, which sometimes conflict with some of the views of teenagers in particular.”

While her son isn’t allowed to make transactions on his own, he has a custodial account in his name and pitches recommendations to his parents when he wants to invest in something. Eventually, Grinberg wants to let him take over his own account. She said that by letting him make his own decisions and suffer the consequences, he’ll build a greater sense of responsibility. But she would do it only when he’s a bit older, knowing that she has built a foundation with years of education about how financial markets work. She’s heard of other parents, even her friends, giving kids money to invest without those building blocks first.

“It’s really dangerous when people think their kids are getting some sort of education that way when in reality they have no idea how to make a sound investment decision,” Grinberg said.

Siegle’s son didn’t get in on the GameStop craze, but he’s already thinking about what he does want to invest in. He’s using what his mom taught him and focusing on companies he uses and can see being successful in the long term. He hopes to buy stock in the online game Roblox when the company goes public.

GameStop: What you need to know

The latest: The CEOs of Reddit, Citadel, Robinhood, Melvin Capital and the Reddit user who helped set off the GameStop stock frenzy testified before the House Financial Services Committee.

Read their testimony here: Reddit | Citadel | Robinhood | Melvin Capital | Keith Patrick Gill aka ‘Roaring Kitty’

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